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Twilio Inc (TWLO)
:TWLO
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Twilio
(NYSE:TWLO)68Neutral
Positive Factors
AI-Driven Growth
Twilio continues to experience AI-driven customer growth and engagement, evolving into an AI-driven platform-based software service.
Valuation and Market Position
The recent sell-off is seen as overdone, presenting a buying opportunity as Twilio trades at a lower valuation compared to its SaaS peers.
Negative Factors
Cash Flow Impact
First-quarter free cash flow will be impacted by a $120 million payment related to its new cash bonus program.
Twilio (TWLO) vs. S&P 500 (SPY)
Market Cap
$17.52B
Dividend YieldN/A
Average Volume (3M)4.40M
Price to Earnings (P/E)―
Beta (1Y)1.60
Revenue Growth7.32%
EPS Growth88.51%
CountryUS
Employees5,867
SectorCommunication Services
Sector Strength85
IndustryInteractive Multi-Media
Share Statistics
EPS (TTM)-0.64
Shares Outstanding152,633,600
10 Day Avg. Volume3,168,855
30 Day Avg. Volume4,397,892
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.99
Price to Cash Flow (P/CF)41.00
P/FCF Ratio41.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$149.55Price Target Upside30.29% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering23
Twilio Business Overview & Revenue Model
Company DescriptionFounded in 2008, California-based Twilio, Inc. provides a cloud communications platform that allows software developers to programmatically make and receive phone calls, send and receive text messages, and perform other communication functions using its web service APIs (Application Programming Interfaces).
How the Company Makes MoneyTwilio makes money primarily through a usage-based revenue model where customers pay for the communication services they use via its APIs. The company charges fees based on the volume of messages sent, minutes of voice calls made, or other communication activities conducted through its platform. Twilio's key revenue streams include programmable messaging, voice, email, and video services. Additionally, Twilio offers solutions such as Twilio Flex, a cloud-based contact center platform, and Twilio Segment, a customer data platform, which contribute to its revenue. Significant partnerships with major technology companies and telecommunications carriers also play a crucial role in expanding its global reach and accessibility, further driving revenue growth.
Twilio Financial Statement Overview
Summary
Twilio demonstrates strong revenue growth and a healthy balance sheet with minimal leverage. However, persistent profitability issues, as shown by negative net income and low return on equity, are significant challenges. The positive trajectory of cash flows and EBITDA improvements provide a hopeful outlook, but the company needs to address profitability to enhance its financial standing.Income Statement
Twilio has shown significant revenue growth with a TTM revenue increase of 7.3% compared to the previous year. The gross profit margin is strong at approximately 50.5%, but the company is facing challenges with profitability, as indicated by negative EBIT and net income margins. Improvements in EBITDA margin from negative in 2023 to positive in TTM suggest operational efficiencies, though profitability remains a concern.65
Positive
Balance Sheet
Twilio's balance sheet reflects a strong equity position with an equity ratio of 80.6%, which is stable and indicates low leverage. The debt-to-equity ratio is favorable at 0.015, showing minimal reliance on debt. However, the return on equity remains negative due to ongoing net losses, which is a critical area for improvement.75
Positive
Cash Flow
The cash flow statement highlights a robust free cash flow growth of 85% in the TTM period, driven by positive operating cash flows. The operating cash flow to net income ratio indicates effective cash management despite negative net income. However, reliance on cash reserves, as indicated by significant cash and equivalents, suggests a need for sustained operational improvements.70
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.46B | 4.15B | 3.83B | 2.84B | 1.76B | 1.13B | Gross Profit |
| 2.25B | 2.04B | 1.81B | 1.39B | 915.66M | 608.92M | EBIT |
| -44.07M | -876.54M | -1.03B | -915.58M | -492.90M | -369.79M | EBITDA |
| 115.79M | -100.34M | -751.82M | -653.76M | -343.24M | -259.36M | Net Income Common Stockholders |
| -96.93M | -1.02B | -1.26B | -949.90M | -490.98M | -307.06M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 4.01B | 4.01B | 4.16B | 5.36B | 3.04B | 1.85B | Total Assets |
| 11.61B | 11.61B | 12.56B | 13.00B | 9.49B | 5.15B | Total Debt |
| 1.18B | 1.18B | 1.23B | 1.27B | 607.23M | 640.22M | Net Debt |
| 521.34M | 521.34M | 575.69M | -204.84M | -326.66M | 386.56M | Total Liabilities |
| 1.88B | 1.88B | 2.01B | 1.97B | 1.03B | 871.11M | Stockholders Equity |
| 9.73B | 9.73B | 10.56B | 11.03B | 8.45B | 4.28B |
| Cash Flow | Free Cash Flow | ||||
| 672.43M | 363.52M | -334.55M | -148.21M | -26.48M | -53.24M | Operating Cash Flow |
| 716.24M | 414.75M | -254.37M | -58.19M | 32.65M | 14.05M | Investing Cash Flow |
| 1.37B | 228.60M | -616.45M | -2.49B | -845.86M | -1.29B | Financing Cash Flow |
| -2.31B | -643.61M | 45.01M | 3.10B | 1.49B | 1.02B |
Twilio Technical Analysis
Negative
114.78
Price Trends
122.76
Negative
106.77
Positive
83.08
Positive
Market Momentum
-3.51
Positive
38.38
Neutral
45.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TWLO, the sentiment is Negative. The current price of 114.78 is below the 20-day moving average (MA) of 129.54, below the 50-day MA of 122.76, and above the 200-day MA of 83.08, indicating a neutral trend. The MACD of -3.51 indicates Positive momentum. The RSI at 38.38 is Neutral, neither overbought nor oversold. The STOCH value of 45.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TWLO.
Twilio Risk Analysis
Twilio disclosed 54 risk factors in its most recent earnings report. Twilio reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Twilio Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $22.64B | 23.40 | 11.31% | ― | 3.05% | 55.96% | |
68 Neutral | $17.52B | ― | -1.38% | ― | 7.32% | 88.51% | |
66 Neutral | $2.53B | ― | -2.21% | ― | 14.44% | 84.58% | |
60 Neutral | $2.58B | ― | 16.58% | ― | 8.99% | 63.84% | |
60 Neutral | $457.12M | ― | -2.09% | ― | 24.52% | 61.08% | |
59 Neutral | $30.54B | 0.25 | -13.23% | 4.04% | 2.36% | -49.53% | |
51 Neutral | $329.23M | ― | -40.17% | ― | -2.23% | 19.48% |
* Communication Services Sector Average
Performance Comparison
TWLO
Twilio
114.78
58.12
102.58%
EGHT
8X8
2.37
-0.30
-11.24%
RNG
RingCentral
27.47
-4.06
-12.88%
FIVN
Five9
33.35
-24.85
-42.70%
BAND
Bandwidth
15.17
-3.14
-17.15%
ZM
Zoom Video Communications
74.93
8.44
12.69%
Twilio Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -22.07% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
The earnings call presents a positive outlook for Twilio, highlighting record revenue and profitability, significant progress in AI adoption, and strong large deal activity. However, there were some challenges, including a decline in Segment revenue, a notable bad debt expense, and a decrease in gross margin. Despite these issues, the positive aspects, such as achieving GAAP operating profitability and strong growth in key areas, outweigh the lowlights.Highlights
Record Q4 Revenue
Twilio reached $1.195 billion in revenue for Q4 2024, marking an 11% increase year over year and the company's second consecutive quarter of double-digit growth.
First-ever GAAP Operating Profitability
Q4 2024 marked the first time Twilio delivered quarterly GAAP operating profitability, ahead of their initial target.
Strong Full Year Performance
For the full year 2024, Twilio generated $4.458 billion in revenue, representing 9% organic growth year over year.
Significant AI Adoption
90% of the Forbes 50 AI startups are building on Twilio, with more than 9,000 companies in the AI space utilizing Twilio services in 2024.
Record Non-GAAP Income and Free Cash Flow
Twilio achieved record non-GAAP income from operations of $197 million in Q4 and $93 million in free cash flow.
Strong Large Deal Activity
In Q4, Twilio closed 78 deals worth $500,000 or more, up 47% year over year, including the largest Segment deal ever.
Lowlights
Segment Revenue Decline
Segment revenue for Q4 2024 was $74 million, down 1% year over year, although bookings slightly accelerated year over year.
Bad Debt Expense Impact
Twilio incurred $17 million in bad debt expenses related to a Brazilian telecom company, impacting operating margin by 140 basis points in Q4.
Gross Margin Decline
Non-GAAP gross margin decreased by 40 basis points year over year and 100 basis points quarter over quarter due to higher hosting costs and increased messaging revenue mix.
Company Guidance
During the Twilio Inc. Fourth Quarter 2024 Earnings Conference Call, key financial metrics and guidance for the future were discussed. Twilio reported a Q4 revenue of $1.195 billion, marking an 11% year-over-year increase and achieving GAAP operating profitability for the first time. For the full fiscal year, Twilio's revenue was $4.458 billion with a 9% organic growth rate. The company also generated a record non-GAAP income from operations of $197 million for Q4 and $714 million for 2024, alongside a significant free cash flow increase to $657 million for the year. Looking forward to 2025, Twilio aims for a 7% to 8% organic revenue growth with continued profitability and free cash flow generation, targeting $825 million to $850 million in non-GAAP income from operations. The company plans to achieve GAAP operating profitability in 2025 and maintain this trajectory in subsequent years, aiming for a 21% to 22% non-GAAP operating margin by 2027. Twilio also emphasized its strategic focus on cross-selling, innovation, and AI integration, with 9,000 AI companies building on its platform, and highlighted its $2 billion share repurchase program set to run through 2027.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.